3. Assignment Exercise 10-2 Components of Balance Sheet and Income Statement (10 Marks)

Refer to the Metropolis Health System (MHS) Balance Sheet and Statement of Revenue and Expense in Chapter 28s MHS Case Study. Patient Accounts Receivable of $7,400,000 is shown as net of $1,300,000 Allowance for Bad Debts. (a) What percent of gross accounts receivable is the allowance for bad debts? (b) If the Allowance for Bad Debts is raised to $1,500,000, where does the extra $200,000 go?